The Hindu : Andhra Pradesh News : Consumer forum asks LIC to pay up

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Sunday, Apr 10, 2005

Andhra Pradesh

Andhra Pradesh

Consumer forum asks LIC to pay up

By Our Special Correspondent

TIRUPATI, APRIL 9. Can an LIC policy be rejected on the ground of suppression of material fact regarding the policyholder's ill-health two years after the policy was accepted? "No," says the Chittoor District Consumer Forum and accordingly directed the LIC, Chittoor branch to pay within six weeks the policy amount of Rs. one lakh with 12 per cent interest to its authorised nominee.

The forum President, P. Ramachandra Reddy, while disposing of the case also ordered payment of Rs. 3000 towards mental agony and another Rs. 2000 towards cost to the petitioner.

Policy revived

One Rajendra Naidu of Ramanaidupalle in G.D. Nellore mandal in the district had taken a Bhima Kiran policy for Rs. one lakh on November 15, 1995. The policy, which lapsed due to non-payment of premium after initial payments, was subsequently revived by Naidu in 2002 through an `authorised agent' of the LIC reportedly after all required medical certification. But he died of jaundice the same year and his wife put in the claim for the payment of the policy amount.

It was however rejected by the LIC on the ground of suppression of a pre-existing disease of the policyholder and the material facts thereof.

`HIV' positive report

The Corporation also submitted to the forum a medical report issued by the Christian Medical College, Hospital, Vellore in 2002 that Naidu was a `HIV positive' patient.

But the forum President observed that it was a subsequent development not only to the acceptance of the policy but to its revival as well, that too after all due certifications. The forum chief also quoted Section 45 of the Insurance Act, which says that a policy cannot be called in question on the ground of misstatement after two years (of acceptance/revival).

`Not justified'

He also observed that once a policy was revived it relates back to the original date of its acceptance and hence held that the repudiation of the policy was not justified. He referred in this connection to a number of previous judgements in identical cases.

Sujatha Devi another member of the Forum also was on the bench.

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